Considering a VA loan? Learn about eligibility requirements, advantages like no down payment, and potential drawbacks. Explore if a VA loan is right for you.
Article: 5 minutes
Updated: July 2, 2026 Published: October 24, 2022
By: USAA Reviewed by: Editorial contributors
To determine if a VA loan is right for you, consider how long you plan to stay in your home and if the savings from no down payment and no PMI outweigh the funding fee and closing costs.
One of the most popular benefits of military service is the ability to access home loans backed by the U.S. Department of Veterans Affairs, or VA. In fact, VA loans are more popular than ever: Over 500,000 purchase or refinance loans were backed by the VA in 2025 Opens in a New Window.
An active or veteran member of the armed forces, or his or her surviving spouse, may already know some of the basics if they are eligible for a VA loan Opens in a New Window:
Even for those who are eligible, the benefits of a VA loan might fall short of the benefits a conventional loan offers. How can you tell if a VA loan is the right choice for you? These five questions can help.
For conventional mortgages, if your down payment is less than 20% of the home's price, you will likely need to pay private mortgage insurance (PMI). This can range from 0.5% to 1.5% or higher and it is calculated annually on the loan amount. The actual cost can vary based on factors like credit score, down payment size, and loan type. This annual premium is typically divided into monthly installments and added to the borrower's monthly mortgage payment.
Except in limited situations, all Federal Housing Administration, or FHA, loans are required to pay mortgage insurance premiums, or MIP. A down payment of less than 10% will require MIP to be paid for the life of the loan. Down payments over 10% will require MIP payments for 11 years.
You can sometimes avoid those costs by choosing a mortgage guaranteed by the VA. But there may be a VA funding fee, which can range from 1.25% to 3.3% of the loan. Some VA loan scenarios require a down payment, such as if you don't have enough entitlement, if the sales price exceeds the conforming loan limit or if the sales price exceeds the appraised value.
Loan amount |
$150,000 |
|---|---|
0% Down |
$0 |
5% Down |
$7,500 |
10% Down |
$15,000 |
20% Down |
$30,000 |
Loan amount |
$250,000 |
0% Down |
$0 |
5% Down |
$12,500 |
10% Down |
$25,000 |
20% Down |
$50,000 |
Loan amount |
$350,000 |
0% Down |
$0 |
5% Down |
$17,500 |
10% Down |
$35,000 |
20% Down |
$70,000 |
Loan amount |
$450,000 |
0% Down |
$0 |
5% Down |
$22,500 |
10% Down |
$45,000 |
20% Down |
$90,000 |
| Loan amount | 0% Down | 5% Down | 10% Down | 20% Down |
|---|---|---|---|---|
$150,000 |
$0 |
$7,500 |
$15,000 |
$30,000 |
$250,000 |
$0 |
$12,500 |
$25,000 |
$50,000 |
$350,000 |
$0 |
$17,500 |
$35,000 |
$70,000 |
$450,000 |
$0 |
$22,500 |
$45,000 |
$90,000 |
| Loan amount | $150,000 |
|---|---|
| 0% Down | $0 |
| 5% Down | $7,500 |
| 10% Down | $15,000 |
| 20% Down | $30,000 |
| Loan amount | $250,000 |
| 0% Down | $0 |
| 5% Down | $12,500 |
| 10% Down | $25,000 |
| 20% Down | $50,000 |
| Loan amount | $350,000 |
| 0% Down | $0 |
| 5% Down | $17,500 |
| 10% Down | $35,000 |
| 20% Down | $70,000 |
| Loan amount | $450,000 |
| 0% Down | $0 |
| 5% Down | $22,500 |
| 10% Down | $45,000 |
| 20% Down | $90,000 |
If you're currently serving and there's a chance you could be redeployed within the next three years, you may want to be cautious about choosing a $0 down VA loan.
Why? Putting no money down means you have no equity in the home when you first take ownership. If you need to sell your home within a few years, this could mean you'll be putting more cash into the sale of the home than you're likely to get out of the sale. This is especially true if the home's value has decreased.
First, here’s a lesson in escrow: An escrow account is set up by a mortgage lender to pay property-related expenses like hazard insurance and property taxes. A portion of each mortgage payment is deposited in the escrow account, and the necessary payments are made from that account. With an escrow account, your total monthly payment is more than the basic principal and interest on your loan, as you're building a fund to pay those necessary property-related expenses. But your lender takes care of processing those payments for you, so you only have to make one monthly payment.
While the VA doesn't require the use of an escrow account, it requires that property taxes be paid and that adequate hazard or flood insurance is in place. Flood insurance is required for VA and conventional loans if the property is in a Special Flood Hazard Area, and it is often escrowed with property taxes and homeowners insurance. This means that annual increases in flood insurance premiums can impact your total monthly mortgage payment, so it's important to be prepared for these potential cost changes.
All VA purchase loans require an appraisal done by a licensed VA-approved professional. This is coordinated by your lender to provide an opinion of the value of the home you hope to purchase. This opinion is based on market research and a close review of the home against the VA's minimum property requirements.
At the end of this process, you'll receive a notice of value, or NOV, that documents the value and includes a list of any items needing repair to meet minimum VA property requirements. Make sure you’re aware of the implications of a home that appraises below purchase price. In these instances, you have a few options:
You can only obtain a VA loan for your primary residence. You can't get a VA loan for vacation homes or investment properties unless you're refinancing an existing loan with no cash out on a residence that used to be your primary.
That said, you can reuse this benefit. If you sell a home you purchased using a VA loan and are looking to purchase another home to be used as your primary residence, you can do so with another VA loan. But if you have enough remaining entitlement, you may not necessarily have to sell your home. Note that your VA funding fee is likely to increase with each new VA loan you get.
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